Commodity Corner: Morning Comments

Good morning,


DXH0  97.160  +0.082                 GCG0  1554.3  -5.8                                    ESH0  3276.00  +11.25                CLG0  59.13  +0.09


There is a positive sentiment to start the week, following Friday’s softer than expected payrolls report.  The prevailing sentiment is that the economy is still moving in the right direction.  This week brings the expected signing of Phase 1 of the trade deal, along with a fresh look at inflation, retail sales and housing.  Gold prices are retreating, as some safe haven protection is being unwound with the Middle East tension continuing to calm.  The same holds true for oil, which finds its price hovering around the $59 mark.  As tensions appear to pull back, oil will again focus on the production quota agreements out of OPEC+ in December, and monitor the adherence to the agreements.  Global economic prospects will continue to weigh on expectations for future oil demand, thus pushing and pulling at prices.


Friday brought a fresh look at supply and demand for the grain markets with the WASDE report.  On the production side, the yield, and hence production numbers, were raised for both corn and soybeans.  Not only were the production figures higher than in December, but they also beat the estimates pretty well.  However, when looking at inventories, especially for corn, the numbers came in lower than December, but higher than the estimates.  Wheat inventories also had lower numbers, both at the domestic and global level.  Soybeans had no change to domestic stocks, but saw an increase in the global stock figure.  Lower global demand, especially following the African Swine Flu epidemic of last year, and with some signs of it showing up again this coming year, playing a role here.  The markets took this news in stride, and closed slightly higher for the session.  Wheat prices were also aided by the planting survey numbers coming in lower than for 2019.  It should be noted this number, while lower, was also higher than what was expected.  Cotton also had a reduction to the production estimate, both domestically and globally, while seeing inventory numbers for both lowered by more than what was expected.   Cotton prices ended higher for the session. 


The coffee market traded higher on Friday, also on the notion of easing Middle East tensions not being a drag on demand for goods.  Coffee also saw some short covering taking place, following the large move down over the past few weeks, and having had another leg down on Thursday following the report that Brazil appeared to be on pace for a very big production season.  The strength of the dollar today is applying some pressure back to coffee prices this morning.  The dollar is also weighing other commodity prices this morning as well.  All of the commodities are also waiting for the official signing of Phase 1 to the trade deal.  The exception to lower commodity prices remains in sugar, where continued expectations of cane millers focusing on ethanol production over sugar production keeps future supply deficit concerns alive.  Also impacting supply are crop risks in India and Thailand, along with the USDA reporting domestic sugar production being lower than what the market expected. 


Friday afternoon saw the most recent look at fund positioning from the CFTC in the COT report.  The data is collected as of last Tuesday, but it did show funds still carrying a decent sized short position in corn.  The size of the spec short in sugar doubled, from 10k to over 20k, which could be assisting in keeping sugar prices bid as well, as funds try to get those shorts back.                  


Technical Moving Averages:

Product               50 day                100 day               200 day

SH0                      928.75                   926.50                   921.50

CH0                      384.25                   386.75                   405.50

WH0                    532.25                   514.25                   513.75

KWH0                  449.00                   435.75                   458.25

MWH0                532.00                   535.50                   550.75

SMH0                  304.3                     305.4                     311.0

BOH0                   32.53                     31.29                     30.26

CLG0                    58.64                     56.62                     57.23

GCG0                   1494.2                   1506.0                   1441.7

LHG0                   70.090                   71.995                   75.750

LCG0                    125.455                 119.870                 118.555

KCH0                   120.55                   111.10                   108.85

CCH0                   2545                       2473                       2443

CTH0                    66.81                     64.40                     66.52

SBH0                    13.07                     12.71                     13.03

JOH0                    101.00                   103.25                   108.80

HGH0                   273.15                   267.35                   271.45





Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC